| The argument is that since service tax per se is an
indirect tax, it is therefore the prime responsibility of the end
user, who here is the client, to pay it. As per the government's notification,
IBF claims that as broadcasters who come under the purview of the
Service Tax Act, they would essentially only need to collect the same
from the client and pass it on to the Central Government. Hence today
onwards, broadcasters have requested agencies to bill the service
tax as an exclusive component, and not inclusive of the negotiated
rate as was practiced earlier.
Interestingly, broadcasters had put forth the same stand in 2001,
but had softened up later "for some clients", but with
the 8 per cent service expected to be increased to 12 per cent in
the Union budget that finance minister P Chidambaram will table
on 8 July, broadcasters are getting increasingly edgy.
A senior industry executive that indiantelevision.com spoke to
said that the "internal note" that had been issued was
"to ensure compliance" from all channels that this edict
be followed across the board, admitting also that there were a few
channels that had not been adhereing to the IBF diktat. "All
channels have been asked to collect release orders and it should
be mentioned in the release order that service tax as applicable
is over and above the deal value," the executive said.
He, however, chose to downplay the issue, saying, "We have
never had a service tax problem for near on two years now. Except
for one or two clients which have been camouflaging it by saying
the deal is inclusive of service tax."
It may be recalled that an ad had been issued recently in all leading
dailies by the directorate of publicity and public relations, customs
& Central excise, specifically clarifying that service tax has
to be paid by the client.
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